Question

2) Annenbaum Corporation uses the weighted average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 400 units. The costs and percentage completion of these units in beginning inventory were: Cost Percent Complete 65% 45% Materials costs Conversion costs $ 5,700 $ 6,800 A total of 6,500 units were started and 5,900 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Materials costs Conversion costs Cost $ 125,500 $ 207,000 The ending inventory was 50% complete with respect to materials and 35% complete with respect to conversion costs. The cost per equivalent unit for materials for the month in the first processing department is closest to: (A) $19.61 B) $18.19 C) $19.01 D) $20.50

Answer 1

Units in beginning work in process inventory + Units started into production or transferred in = Units in ending work in process inventory + Units completed and transferred out

Or, 400 + 6500 = Units in ending work in process inventory + 5900

Or, Units in ending work in process inventory = 1000 units

Units transferred to next department	5900
Ending work in process = 1000 X 50%	500
Equivalent units of production	6400

Cost of beginning work in process inventory	5700
Costs added during the year	125,500
Total costs	131,200
Equivalent units of production	6400
Cost per equivalent unit (131200/6400)	20.5

Hence, the correct option is D. $ 20.5